Private chit funds remain unchecked

KOCHI: The private chit companies in the district have grown by leaps and bounds over the past two months thanks to the lack of restrictions from government. According to the statistics by the Registrar of Companies (ROC), 229 companies were registered in the district during April 1 to June 20. Of these, chit companies (61) gained the third position. The top places were occupied by computer companies (79) and wholesale trading firms (63).The sharp increase in the number of chit companies is a matter of concern in the wake of public sector banks and reputed private financial institutions offering easy loans like farm loans and gold loans.  According to ROC Joseph Jackson, any private party with a capital base of `1 lakh can start a chit fund company and those with `5 lakh a public company. Joseph said the ROC does not have much say in this aspect as its duty is confined to the registration of the companies. But he said that the ROC does provide details of chit companies to the police.A strong mechanism to monitor the activities of chit funds is needed in Kerala, where umpteen incidents of chit companies deceiving investors, are reported almost daily.  The neighbouring states have already implemented norms for the functioning of such companies, sources said.They said that 70 per cent of the money pumped into the chit funds are unaccounted money. The customers are not given any valid document for the transactions. The private chit companies mainly use cash for their operation, sources said.